7 Important NFT Trends (2022)
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From digital art to Super Bowl tickets, NFTs are taking the world by storm.
But what are the biggest trends in the NFT space for 2022?
And what’s coming around the corner?
Read on to find out.
1. Crypto Exchanges Begin to Sell NFTs
Over the last 2 years, demand for NFTs has become ravenous.
Interest in the search term “NFT Gallery” has increased by 4,900% in the last 2 years.
Up until recently, the biggest beneficiaries of this trend have been auction sites that deal exclusively with NFT sales.
For example, OpenSea (the largest NFT marketplace by sales volume) generated $2.7 billion during the first half of January 2022 (putting them on pace to break their August 2021 record of $3.4 Billion).
Number of OpenSea Users over the last 5 years.
That said, because NFTs are purchased with cryptocurrency, most people have to buy tokens on a centralized exchange (and send them off the exchange to a virtual wallet) before they can buy an NFT.
For experienced crypto users, this is a common practice. For beginners, however, buying and selling NFTs can be highly intimidating.
First, the fees to send Ethereum (the most common token used to buy and sell NFTs) from one wallet to another can cost anywhere from $50 to $100 or more.
Second, even the slightest mistake during the transfer process can result in the funds being permanently lost.
With millions of dollars on the line, and consumers already using crypto trading platforms as a stepping stone, this creates a huge opportunity for centralized cryptocurrency exchanges to enter the NFT space.
OpenSea monthly sales volume.
First, hosting an NFT marketplace on a centralized exchange improves the customer’s user experience by removing the need to transfer money off the exchange (which involves both risks and fees).
Second, adding an NFT marketplace helps centralized exchanges grow their profit margins.
The first high-profile exchange to announce its plans was Binance, which launched its NFT division in June of 2021.
OpenSea cumulative sales volume.
Because they’re so new, there is no data available as to how much revenue each company’s marketplace has generated so far.
With that said, Coinbase had more than 1.5 million users sign up for the waitlist within 48 hours of announcing they’d be launching a marketplace.
2. Companies Jump on the NFT Bandwagon
With consumer interest in NFTs skyrocketing, many of today’s top corporations are exploring how they can get in on the action.
Admittedly, some of their moves are most likely publicity stunts (as many estimate is what happened with Pepsi’s NFT launch in late 2021).
On the flip side, some companies are taking the NFT game seriously.
In January of 2022, YouTube CEO Susan Wojcicki announced the platform would be “assembling a task force to research the entirety of the Web3 ecosystem”.
According to her speech, their goal is to better identify how Web3, blockchain, and NFTs can be used to more effectively support both content creators and their fans.
Shortly after, Adidas and Prada made slowfactory they launched a community-driven project known as “Re-Source”.
The NFT itself is a virtual composition made up of 3,000 user-submitted photos.
Most interestingly, the 3,000 fans whose submissions were accepted will earn ongoing royalties from any future sales of the mosaic.
And while fashion brands, in particular, have been fast to jump on the trend, they’re not the only ones.
NFTs cannot be falsified or duplicated. And, importantly, the technology behind NFTs creates a permanent, unalterable chain of custody. This is why many see NFTs as the perfect vehicle for verifying the authenticity of collectibles.
Up until recently, the only way to verify the authenticity of an antique, collector’s item, etc. was to depend on the opinion of a professional.
While billions of dollars of collectibles change hands using this system, depending on others for verification introduces the possibility of both human error and outright fraud.
NFTs, however, fix this.
And in what is arguably the first application of NFT technology to a real-world collectible, the National Football League (NFL) recently announced they’d be sending Super Bowl ticket holders an NFT as proof of purchase.
Days later, real estate startup Propy announced they’d sold the first piece of US real estate backed by an NFT.
In reality, no one knows if selling real estate or event tickets via NFTs will ever go mainstream. The potential, however, is quite interesting.
Mainly because connecting NFTs to property titles and land deeds would allow users to buy and sell real estate via a virtual exchange (similar to how people buy and sell stocks today).
3. VC Money Flows Into NFTs
It should come as no surprise venture capitalists are looking to cash in on the NFT craze.
Investment in blockchain companies since 2015.
The trend started off small, with industry heavy-weight Andreessen Horowitz making a $23M Series A investment into OpenSea.
Since then, VC investments into the NFT space have ballooned in both frequency and dollar amounts invested.
In February of 2022, venture capital firms Velvet Sea Adventures and 01 Advisors (aka O1A) announced they’d be investing $100M into NFT platform Pixel Vault, Inc.
The goal of the project is to leverage Pixel Vault’s existing intellectual property (and in particular superhero NFTs) to create a comic book-esque series that follows major industry events (and drama) in the world of Web3.
Monthly visitors of Pixel Vault’s Punks Comic website (source: SimilarWeb).
According to their website: “Autograph brings together the most iconic brands and legendary names in sports, entertainment and culture to create unique digital collections and experiences.”
Unlike most projects, however, Autograph NFTs include more than just “ownership” of digital art.
Instead, buyers also get access to exclusive content, private communities, real-life experiences with the NFT creators themselves (many of which are famous sports stars).
As an example, purchasing one of Tom Brady’s limited edition Ruby NFTs (of which there are only 12) gets buyers Early Bird access to future NFT drops and inclusion in a private Discord community (as of this writing it's unclear whether the retired NFL superstar will be active in the community).
And in what could be the largest investment into an NFT project ever, Yuga Labs - the company behind the now-infamous Bored Ape Yacht Club (BAYC) NFT collection - is seeking an investment that would value Yuga at $5B.
Searches for "Yuga Labs" are up 3,200% in 5 years.
Unlike most of the projects VC is investing in, Yuga does not run or operate an NFT exchange.
Instead, as the creators of the project, they collect royalties every time a BAYC NFT is sold. Further, with more and more celebrities purchasing BAYC NFTs every month that goes by, Bored Ape Yacht Club as a brand is becoming increasingly valuable.
Because of that, it's fair to assume Yuga Labs will be able to generate revenue via licensing deals (in addition to the merchandise they already sell).
4. Alternative Chain Launches
When the first generation of projects launched in 2017, the fees involved in buying and selling NFTs - which involved transacting on the Ethereum blockchain - were minimal.
While this was a mere inconvenience for crypto millionaires and diehard flippers (some of whom make hundreds of thousands of dollars), the fees created a high barrier to entry for everyday investors.
To address this problem, NFT creators began launching their projects on other, more affordable blockchains (like Avalanche and Solana).
In the beginning, many of these projects failed to gain traction.
Over time, however, the sub-dollar fees involved in transacting on alternative chains attracted an increasingly large number of NFT collectors who could not (or refused to) transact on Ethereum.
Today, alternative chain platforms now process hundreds of millions of dollars in NFT volume.
As an example, Solana-based NFT exchange Solanart has processed more than $544 million in sales volume since its launch in June of 2021.
Along the same lines, SolSea (whose naming riffs on the industry-leading OpenSea marketplace) receives over four million website visitors per month.
SolSea website visitors (Source: SimilarWeb).
In fact, in January of 2022, NFT tracker CryptoSlam! announced Solana NFT volume surpassed $1B for the very first time.
And while they’re nowhere near as popular, NFTs based on the Avalanche blockchain have done $67M in sales volume.
Admittedly, Ethereum developers are taking serious steps to lower the fees involved in transacting on their platform.
However, as NFTs on alternative, low-cost chains gain traction, both investors and everyday crypto users believe it may be too little too late.
5. Increasing Government Regulation
While cryptocurrency investors have dealt with the threat of regulation for years, the government’s interest in regulating NFTs is a relatively new phenomenon.
Because NFTs are purchased and sold using cryptocurrency, and because the wallets used to do so are (in most cases) anonymous, regulators have become suspicious of the $20 billion+ NFT market.
In particular, the US Treasury Department recently released a study highlighting the fact NFTs may be used to both launder money and finance terror operations.
On the one hand, regulators have been saying the same thing about Bitcoin for years.
Further, not all regulations are focused on criminal activity.
In France, the Financial Action Task Force is attempting to clarify how NFTs should be classified and what specific criteria determine whether an NFT should be considered a virtual asset, security, or something else.
The same goes for the United States Securities and Exchange Commission, which is also working to clarify which NFTs should and should not be considered securities.
Lastly, 2021 saw a variety of legal battles surrounding the concept of exactly who owns what when it comes to NFTs.
As an example, an organization known as Spice DAO recently purchased an unpublished manuscript of the highly successful 2021 film “Dune”.
After making the purchase, the owners of Spice DAO assumed ownership of the manuscript gave them the ability to license the Dune brand and the story contained within.
That assumption turned out to be incorrect, leading to a highly publicized story in which the Spice DAO owners had to reverse course on an animated series they were planning on publishing.
6. NFTs As Social Media Profile Pictures
In yet another sign NFTs are going mainstream, a growing list of social media companies are now allowing users to post NFTs as their profile pictures.
The trend started in January of 2022 when Twitter announced users could swap their headshot for an NFT.
Shortly after, Meta Platforms Inc. (which owns Facebook and Instagram) announced they too would allow NFTs as profile pics.
Interest in using NFTs as Profile Pictures.
What makes this trend interesting is how these companies are using technology to verify ownership of an image.
Admittedly, anyone with a computer can “right-click save” an NFT, pretend it’s theirs, and upload it to their social media profile.
To combat this, social media companies will use some kind of badge or profile outline to differentiate between profile pics that have been uploaded and NFTs that have been verified inside the user’s cryptocurrency wallet.
7. Blockchain Domain Names
In what is a less exciting, but more practical application of NFT technology, blockchain domains have become a hot item.
If you’ve ever used a cryptocurrency wallet, you know it's near impossible to memorize your wallet’s “address”.
Mainly because cryptocurrency wallet addresses contain a random mix of 30+ letters and numbers.
To address this inconvenience, a handful of companies invented what are now known as Blockchain Domain Names.
Unlike regular .com domain names, blockchain domain names are not used to host websites. Instead, blockchain domain names are ERC-721 tokens (the technology behind NFTs) that act as link shorteners for cryptocurrency wallet addresses.
As an example, let’s say John Doe wants to request $100 in Bitcoin from Jane Doe.
Without a blockchain domain name, John would have to sign into his wallet, copy his address, and then text or email his address to Jane (who would then have to copy/paste it into her crypto wallet to complete the transfer).
Blockchain domain names, however, make this process dramatically easier.
Instead of having to look up and share his address, John could simply mention to Jane that he owns JohnDoe.Bitcoin. From there, Jane could send the $100 straight to John’s domain name (which, in turn, would deposit the $100 into John’s Bitcoin wallet).
And because of that convenience, an increasing number of crypto users are locking in their domains (the ownership rights of which are permanent and require no renewal fees).
In fact, industry leader Unstoppable Domains ranks among the top 15,000 websites in the world (receiving more than 2 million visitors per month).
Unstoppable Domains website traffic (source: SimilarWeb).
There you have it: seven of the top NFT trends for 2022.
From venture capitalists and sports stars to Average Joe collectors, NFTs seem to be taking the public by storm.
A macro-trend we expect to continue into 2023 and beyond.